OLIN Corp 10-Q

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk in the normal course of our business operations due to our purchases of certain commodities, our ongoing investing and financing activities and our operations that use foreign currencies. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies and procedures governing our management of market risks and the use of financial instruments to manage exposure to such risks. Energy costs, including electricity and natural gas, and certain raw materials used in our production processes are subject to price volatility. Depending on market conditions, we may enter into futures contracts, forward contracts, commodity swaps and put and call option contracts in order to reduce the impact of commodity price fluctuations. As of March 31, 2024, we maintained open positions on commodity contracts with a notional value totaling $239.9 million ($191.0 million at December 31, 2023 and $220.6 million at March 31, 2023). Assuming a hypothetical 10% increase in commodity prices which are currently hedged, as of March 31, 2024, we would experience a $24.0 million ($19.1 million at December 31, 2023 and $22.1 million at March 31, 2023) increase in our cost of inventory purchased, which would be substantially offset by a corresponding increase in the value of related hedging instruments. We transact business in various foreign currencies other than the USD which exposes us to movements in exchange rates which may impact revenue and expenses, assets and liabilities and cash flows. Our significant foreign currency exposure is denominated with European currencies, primarily the Euro, although exposures also exist in other currencies of Asia Pacific, Latin America, Middle East and Africa. For all derivative positions, we evaluated the effects of a 10% shift in exchange rates between those currencies and the USD, holding all other assumptions constant. Unfavorable currency movements of 10% would negatively affect the fair values of the derivatives held to hedge currency exposures by $32.2 million. These unfavorable changes would generally have been offset by favorable changes in the values of the underlying exposures. We are exposed to changes in interest rates primarily as a result of our investing and financing activities. Our current debt structure is used to fund business operations, and commitments from banks under our Senior Revolving Credit Facility and AR Facilities are additional sources of liquidity. As of March 31, 2024, December 31, 2023 and March 31, 2023, we had long-term borrowings, including current installments and finance lease obligations, of $2,765.7 million, $2,670.1 million and $2,774.2 million, respectively, of which $988.4 million, $893.7 million and $998.7 million at March 31, 2024, December 31, 2023 and March 31, 2023, respectively, were issued at variable rates. Included within long-term borrowings on the condensed balance sheets were deferred debt issuance costs and unamortized bond original issue discount. Assuming no changes in the $988.4 million of variable-rate debt levels from March 31, 2024, we estimate that a hypothetical change of 100-basis points in the secured overnight financing rate (SOFR) would impact annual interest expense by $9.9 million. If the actual changes in commodities, foreign currency, or interest pricing is substantially different than expected, the net impact of commodity risk, foreign currency risk, or interest rate risk on our cash flow may be materially different than that disclosed above. 31 Table of Contents We do not enter into any derivative financial instruments for speculative purposes.